Aug 23, 2002 : The webhost industry: week review

📅 August 23, 2002 - The Web hosting industry had a lot to listen to this week, as several regulatory bodies announced developments in major decisions, decisions were made regarding ambitious lawsuits that threatened to change the way the industry looks at accountability, and a collection of research organizations weighed in with the results of recent studies.
Most significant, though, were the developments in decisions facing both the SEC and ICANN regarding some questions with eagerly-awaited answers.
The US Securities and Exchange Commission ruled early in the week that the accounting practiced used by some telecommunications companies to swap capacity was invalid. The ruling means that companies that relied on the practice to inflate revenues may be forced to restate their financial results.
The American Institute of Certified Public accountants said that while the ruling may not affect every transaction, the matter was certainly one that CEOs and CFOs would want to consider before certifying their companies? previously-filed reports.
Also early in the week, the Internet Corporation for Assigned Names and Numbers released a preliminary staff report containing the evaluations of eleven proposals submitted by organizations hoping to become the next operator of the registry for the .org top level domain.
The report, which is subject to comment by the public and all the bidders before being submitted to the ICANN board of directors, recommends the Internet Society as the organization best equipped to take over management of the .org registry from VeriSign on January 1, 2003.
On Thursday, the Recording Industry Association of America said it would drop its lawsuit filed earlier in the week against a collection of network providers and ISPs, including AT&T, Cable & Wireless, Advanced Network Services and WorldCom. The suit claimed that the companies were responsible for allowing Internet users to access the Listen4ever Web site, where they could illegally copy music. The RIAA said it dropped the suit when the site was taken off the Internet.
Also coming on Thursday was a ruling in BT's patent case against Prodigy Communications over the use of hyperlinks. A US District Judge awarded Prodigy its motion for summary judgment and dismissed the case, saying no jury could find that Prodigy infringes BT's patent.
BT's case claimed that the Internet infringed on one of its patents, and sought licensing fees from ISPs that hosted Web pages containing hyperlinks. If BT had won, ISPs might all have had to pay licensing fees to the British telecommunications firm.
Along with the big decisions, this week, came the results of a number of studies from a collection of research organizations including Gartner, the Yankee Group, Telegeography and others.
On Monday, Gartner released the results of its 2002 European Web Hosting Magic Quadrant, identifying niche players, visionaries, challengers and leaders in the industry, based on their "ability to execute" and "completeness of vision." Among those named to the leaders quadrant was European telecommunications giant Cable & Wireless.
Tuesday saw the release of the Yankee Group's new report designed to determine what customers really think of managed services. The report, titled "Managed Services: What the Enterprises Are Really Saying," offers the customer's point of view on the benefits and potential pitfalls of managed services.
And on Wednesday, statistics and analysis firm Telegeography announced the results of a new study indicating that the excess of capacity on metropolitan fiber networks is less than that of their long-haul counterparts. The report says that while there is a glut of capacity in both cases, the gap between supply and demand in the metro network is significantly smaller than that on long-haul networks.
"This is good news for providers of intra-city networks, who will likely see an end to the chronic oversupply of bandwidth much sooner than long-distance operators," said TeleGeography director of research Tim Stronge.
The Yankee Group released another report on Thursday, this one indicating that Web services are taking hold in Europe with major brands leading the adoption of the technology in Europe's largest markets. According to the report, titled "Web Services: Creeping into Europe," early adopters like financial services and telecom operators are expected to fully leverage Web services by the end of 2004, while other sectors are expected to follow by the end of 2005.
Gartner also reappeared this week through its Dataquest organization, which released a report on Thursday, indicating that server sales in Europe, the Middle East and Africa fell by 14 percent for the second quarter of 2002. Sales figures for servers declined by 14 percent to $3.54 billion, while Unit shipments fell by 4.1 percent. Among the top five manufacturers, market share fell for number-one Compaq, number-two IBM and number-four Hewlett-Packard, while third- and fifth-ranked Dell and Sun saw small gains.
Overall, it was a promising week for the Web hosting business, with all of the major decision-making turning in favor of the end user. The quantity of research data released this week provided a broad and interesting perspective into the possibilities contained in the industry's near future.